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Mon, 10 Oct 2005 Japanese labels want 'iPod tax'

Jonny Evans

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Japanese labels are pushing local lawmakers to impose a blanket tax on iPod sales, as they seek a slice of Apple's pie.

Music labels there have asked for a royalty between 2-5 per cent on the retail price of Apple's music players. Money collected would be shared between labels, songwriters and artists. It's explained as an attempt to compensate rights holders for home copying.

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Consumers cry 'foul'

A similar tax imposed in Canada was overturned earlier this year by the courts in that country.

Reaction to the demands of Japanese firms has been critical. "This is typical of how industry groups try to manipulate government at the expense of consumers," Hiroko Mizuhara, head of the Consumers Union of Japan, told the New York Times.

Some labels continue to attempt to impede Apple's progress in Japan, with Sony Music Japan and Warner Music so far declining to license their content through the market-leading iTunes Music Store.

Labels want the money

Music labels - castigated by Apple CEO Steve Jobs as being "greedy" - want a lot from Apple at present. Ignoring Jobs' argument that any sudden price hikes in music download prices threatens to drive consumers back to illegal file-sharing, the labels want to raise prices. The labels call this "price flexibility".

The labels complain that Apple - which makes no significant income through music sales - makes money from iPod sales, and want a slice of that income, too.

Artists, meanwhile, are beginning to dissent with major-label opinion that music piracy is damaging to artists, not least because most major label contracts impose a far lower royalty-payment system on downloads.

Artists cry 'foul'

Artists are furious that they can receive as little as 4.5p from every 79p download, with the majority of the money going to the labels. While labels justify this by saying they have had to invest in anti-piracy initiatives, artists point out that they also subsidise such investments.

For musicians, the problem is compounded because digital music sales are the only industry sector seeing significant growth, while sales of physical formats decline.

Tim Bajarin of Creative Strategies told The New York Times: "Recording industries on both sides of the Pacific are trying to find all kinds of schemes to make more money. They have this alternative commercial channel, and they're just trying to block it or tax it."

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